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Professor Ferdinand Porsche founded the company called "Dr. Ing. h. c. F. Porsche GmbH" in 1930,[12] with main offices at Kronenstraße 24 in the center of Stuttgart. Initially, the company offered motor vehicle development work and consulting[12] but did not build any cars under its own name. One of the first assignments the new company received was from the German government to design a car for the people, a "Volkswagen" in German.[12] This resulted in the Volkswagen Beetle, one of the most successful car designs of all time. The first Porsche, the Porsche 64, was developed in 1939 using many components from the Beetle.[12]

During World War II,[13] Volkswagen production turned to the military version of the Volkswagen Beetle, the Kübelwagen,[13] 52,000 produced, and Schwimmwagen,[13] 14,000 produced. Porsche produced several designs for heavy tanks during the war, losing out to Henschel & Son in both contracts that ultimately led to the Tiger I and the Tiger II. However, not all this work was wasted, as the chassis Porsche designed for the Tiger I was used as the base for the Elefant tank destroyer. Porsche also developed the Maus super-heavy tank in the closing stages of the war, producing two prototypes.[citation needed]

At the end of WW2 in 1945, the Volkswagen factory fell to the British. Ferdinand lost his position as Chairman of the Board of Management of Volkswagen, and a British Army Major - Ivan Hirst was put in charge of the factory. (In Wolfsburg, the VW company magazine dubbed him "The British Major who Saved Volkswagen."[14]) On 15 December of that year, Ferdinand was arrested for war crimes, but not tried. During his 20-month imprisonment, Ferdinand Porsche's son, Ferry Porsche, decided to build his own car because he could not find an existing one that he wanted to buy. He also had to steer the company through some of its most difficult days until his father's release in August 1947.[15] The first models of what was to become the 356 were built in a small sawmill in Gmünd, Austria.[15] The prototype car was shown to German auto dealers, and when pre-orders reached a set threshold, production was begun. Many regard the 356 as the first Porsche simply because it was the first model sold by the fledgling company. Porsche commissioned Zuffenhausen-based company Reutter Carosseri, which had previously collaborated with the firm on Volkswagen Beetle prototypes, to produce the 356's steel body. In 1952, Porsche constructed an assembly plant (Werk2) across the street from Reutter Carosseri; the main road in front of Werk1, the oldest Porsche building is now known as Porschestrasse.[16] The 356 was road certified in 1948.

Porsche’s company logo was based on the coat of arms of Free People's State of Württemberg of former Weimar Germany, which had Stuttgart as its capital and became part of Baden-Württemberg after the political consolidation of West Germany in 1949.

Not long afterwards, on 30 January 1951, Ferdinand Porsche died from complications following a stroke.

In post-war Germany, parts were generally in short supply, so the 356 automobile used components from the Volkswagen Beetle including its engine, gearbox, and suspension. The 356, however, had several evolutionary stages, A, B, and C, while in production and many Volkswagen parts were replaced by Porsche-made parts. The last 356s were powered by entirely Porsche-designed engines. The sleek bodywork was designed by Erwin Komenda who also had designed the body of the Beetle. Porsche's signature designs have, from the beginning, featured air-cooled rear-engine configurations (like the Beetle), rare for other car manufacturers, but producing automobiles that are very well balanced.

In 1964, after some success in motor-racing, namely with the Porsche 550 Spyder, the company launched the Porsche 911 another air-cooled, rear-engined sports car, this time with a 6-cylinder "boxer" engine. The team to lay out the body shell design was led by Ferry Porsche's eldest son, Ferdinand Alexander Porsche (F. A.). The design phase for the 911 caused internal problems with Erwin Komenda who led the body design department until then. F. A. Porsche complained Komenda made changes to the design not being approved by him. Company leader Ferry Porsche took his son's drawings to neighbouring body shell manufacturer Reuter bringing the design to the 1963 state. Reuter's workshop was later acquired by Porsche (so-called Werk II). Afterward Reuter became a seat manufacturer, today known as Keiper-Recaro.

The design group gave sequential numbers to every project (356, 550, etc.) but the designated 901 nomenclature contravened Peugeot's trademarks on all 'x0x' names, so it was adjusted to 911. Racing models adhered to the "correct" numbering sequence: 904, 906, 908. The 911 has become Porsche's most well-known and iconic model - successful on the race-track, in rallies, and in terms of sales. Far more than any other model, the Porsche brand is defined by the 911. It remains in production; however, after several generations of revision, current-model 911s share only the basic mechanical concept of a rear-engined, six-cylinder coupe, and basic styling cues with the original car. A cost-reduced model with the same body, but 356-derived running gear (including its four-cylinder engine), was sold as the 912.

In 1972, the company's legal form was changed from limited partnership to public limited company (AG in German), because Ferry Porsche and his sister, Louise Piëch, felt their generation members did not team up well. This led to the foundation of an executive board whose members came from outside the Porsche family, and a supervisory board consisting mostly of family members. With this change, no family members were in operational charge of the company. F. A. Porsche founded his own design company, Porsche Design, which is renowned for exclusive sunglasses, watches, furniture, and many other luxury articles. Ferdinand Piëch, who was responsible for mechanical development of Porsche's serial and racing cars, formed his own engineering bureau, and developed a five-cylinder-inline diesel engine for Mercedes-Benz. A short time later he moved to Audi and pursued his career through the entire company, up to and including, the Volkswagen Group boards.

The first Chief Executive Officer (CEO) of Porsche AG was Dr. Ernst Fuhrmann, who had been working in the company's engine development. Fuhrmann was responsible for the so-called Fuhrmann-engine used in the 356 Carrera models, as well as the 550 Spyder, having four overhead camshafts instead of a central camshaft, as in the Volkswagen-derived serial engines. He planned to cease the 911 during the 1970s, and replace it with the V8-front engined grand sportswagon 928. As we know today, the 911 outlived the 928 by far. Fuhrmann was replaced in the early 1980s by Peter W. Schutz, an American manager and self-proclaimed 911 aficionado. He was then replaced in 1988 by the former manager of German computer company Nixdorf Computer AG, Arno Bohn, who made some costly miscalculations that led to his dismissal soon after, along with that of the development director, Dr. Ulrich Bez, who was formerly responsible for BMW's Z1 model, and today is CEO of Aston Martin.

In 1990, Porsche drew up a memorandum of understanding with Toyota to learn and benefit from Japanese production methods. Currently Toyota is assisting[citation needed] Porsche with hybrid technology, rumoured to be making its way into a Hybrid Cayenne SUV, and announced for the 2011 model four-door coupe, the Porsche Panamera.

Following the dismissal of Bohn, an interim CEO was appointed, longtime Porsche employee, Heinz Branitzki, who served in that position until Dr. Wendelin Wiedeking became CEO in 1993. Wiedeking took over the chairmanship of the board at a time when Porsche appeared vulnerable to a takeover by a larger company. During his long tenure, Wiedeking has transformed Porsche into a very efficient and profitable company.

Ferdinand Porsche's grandson, Ferdinand Piëch, was chairman and CEO of the Volkswagen Group from 1993 to 2002. Today he is chairman of the supervisory board. With 12.8 per cent of the Porsche voting shares, he also remains the second largest individual shareholder of Porsche AG after his cousin, F. A. Porsche, (13.6 per cent).

Porsche's 2002 introduction of the Cayenne also marked the unveiling of a new production facility in Leipzig, Saxony, which once accounted for nearly half of Porsche's annual output. The Cayenne Turbo S has the second most powerful production engine in Porsche's history, with the most powerful belonging to the Carrera GT.

In 2004, production of the 612 horsepower (456 kW; 620 PS) Carrera GT commenced in Leipzig, and at EUR 450,000 ($440,000 in the United States) it was the most expensive production model Porsche ever built.

As of 2005, the extended Porsche and Piëch families controlled all of Porsche AG's voting shares. In early October 2005 the company announced acquisition of an 18.53% stake in Volkswagen Group (VWAG) and disclosed intentions to acquire additional VWAG shares in the future. As of June 2006, the Porsche AG stake in VWAG had risen to 25.1%, giving Porsche a blocking minority, whereby Porsche can veto large corporate decisions undertaken by VWAG.

In mid-2006, after years of the Boxster (and later the Cayenne) as the dominant Porsche in North America, the 911 regained its position as Porsche's backbone in the region. The Cayenne and 911 have cycled as the top-selling model since. In Germany the 911 clearly outsells the Boxster/Cayman and Cayenne.

Relationship with Volkswagen

The company has always had a close relationship with initially the Volkswagen (VW) marque, and later, the Volkswagen Group (VWAG) (which also owns Audi AG), because the first Volkswagen Beetle was designed by Ferdinand Porsche. The two companies collaborated in 1969 to make the VW-Porsche 914 and 914-6, whereby the 914-6 had a Porsche engine, and the 914 had a Volkswagen engine, in 1976 with the Porsche 912E (USA only) and the Porsche 924, which used many Audi components, and was built at Audi's Neckarsulm factory. Most Porsche 944s also were built there although they used far fewer VW components. The Cayenne, introduced in 2002, shares its entire chassis with Volkswagen Touareg and Audi Q7, which is built at the VWAG factory in Bratislava. In late 2005, Porsche took an 18.65% stake in the Volkswagen Group, further cementing their relationship, and preventing a takeover of Volkswagen Group, which was rumored at the time. Speculated suitors included DaimlerChrysler AG, BMW, and Renault.

On 26 March 2007, Porsche took its holding of Volkswagen shares to 30.9%, triggering a takeover bid under German Law. Porsche then formally announced in a press statement that it did not intend to take over Volkswagen (it would set its offer price at the lowest possible legal value), but intended the move to avoid a competitor taking a large stake, or to stop hedge funds dismantling VWAG, which is Porsche's most important partner.[18] Porsche's move comes after the European Union moved against a German Law that protected VWAG from takeovers. Under the so-called "Volkswagen Law", any shareholder with more than 20% of the voting rights has veto power over any corporate decision in the annual general meeting - in effect, any shareholder in VWAG cannot exercise more than 20% of the firm's voting rights, regardless of their level of stock holding. (The local state government of Lower Saxony owns 20.1% of the shares.[19]) However, the European Court of Justice ruled against the law, potentially paving the way for a takeover.[20]

On 16 September 2008, Porsche increased its shares by another 4.89%,[21] in effect taking control of the company, with more than 35% of the voting rights. It again triggered a takeover bid, but this time over Audi. Porsche dismissed the bid as a mere formality, since it is Porsche's intention to keep the corporate structure of the Volkswagen Group.

There has been some tension and anxiety amongst the Volkswagen Group workers, who fear that a Porsche takeover might signify a hardened production efficiency control, rejection of demands for payment rises or even personnel cuts.[22] Ferdinand Piëch and his cousin, Wolfgang Porsche, also seemed to be on a collision course.[22]

On August 13,Volkswagen Aktiengesellschaft’s Supervisory Board signed the agreement to create an integrated automotive group with Porsche led by Volkswagen. Volkswagen will initially take a 42.0 percent stake in Porsche AG by the end of 2009, and it will also see the family shareholders selling the automobile trading business of Porsche Holding Salzburg to Volkswagen.

Corporate restructuring

Through the Volkswagen Group stake acquisition, Porsche intends to reform the company's format, with Dr Ing. h. c. F. Porsche AG becoming a subsidiary of a newly formed holding company called "Porsche Automobil Holding SE". Thus the operating activities are separated from holding activities of the company. There was an Extraordinary General Meeting (EGM) for Porsche AG shareholders which took place on 26 June 2007, at the Porsche Arena in Stuttgart, Germany to discuss the change to the company structure.

On 3 March 2008, Porsche set the stage for obtaining a majority stake in the Volkswagen Group. One day later Porsche sought to allay fears it would attempt to force a merger with Volkswagen Group. By September, Porsche owned a 35.14% majority stake in Volkswagen Group, effectively giving it control over the company. Volkswagen Group expected the move, and continues to welcome Porsche's investment.

On 26 October 2008, Porsche announced its intent to raise its stake in Volkswagen Group to 75% during 2009.

On 7 January 2009, Porsche's holding in VWAG was raised to 50.76%.[29] Porsche's move automatically triggered a bid for Scania AB because VWAG already had a controlling position in the Swedish truckmaker.[30] As Porsche had no strategic interest in the company, on 19 January, they offered the minimum price in that mandatory takeover bid. Porsche SE owned 50.8 percent of Volkswagen Group as of 5 January 2009, and has said it plans to lift the stake to 75 percent before the end of 2009, at that level they could bring VWAG's cash onto Porsche's books.

In March 2009, Porsche SE is aiming for its first ever credit ratings from U.S. rating agencies Standard & Poor's and Moody's.

In its efforts to acquire a majority holding in Volkswagen, Porsche built up a large debt burden, aggravated by taxes due on very large paper profits from Volkswagen options. By July 2009, Porsche was faced with debts exceeding 10 billion euros. The supervisory board of Porsche finally agreed to a number of arrangements whereby the Qatar Investment Authority would inject a large amount of capital and Porsche would be merged with Volkswagen. On 23 July 2009, Michael Macht was appointed CEO, to replace Wendelin Wiedeking, who is expected to receive a compensation package of 50 million euros.

According to CNBC, "Volkswagen has Sealed the Deal for Porsche" as of 14 August 2009.

On August 31, reports began circulating that under Volkswagen's umbrella, the Cayenne and Panamera will be axed from Porsche's line-up once they complete their model cycles in seven years so as to reduce competition with Volkswagen's current SUV and sedan offerings. Volkswagen believes that it is oversaturated with SUVs and sedans and will thus restructure Porsche to be a strictly sports car-producing brand. This would mean that the Boxster, Cayman and 911 would survive, along with rumored introductions of a successor to the Carrera GT supercar and an entry-level roadster to be positioned below the current Boxster. The reports, however, are yet to be confirmed from either Porsche or Volkswagen AG.